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Workmans Comp Audit

Discussion in 'Business Operations' started by bbpropmaint, Mar 7, 2007.

  1. bbpropmaint

    bbpropmaint LawnSite Member
    Messages: 60

    My insurance company sent me a letter stating that i have an upcoming audit on my workers comp policy..They want to see my payroll records..i do not have a payroll!!!! the only reason for my comp policy is it is required to bid on certain projects...what do i do??What will they want to see..my business is a partnership ...if i need help its usually a friend i pay under the table, which isnt often..any advice??
  2. jsf343

    jsf343 LawnSite Bronze Member
    Messages: 1,786

    I am being audited soon too. I ran a thread the other day (look farther down and you will find it) and a few responded saying it is no big deal at all. However, I am curious why in the world you have workers comp if you don't have employees on payroll. You need to square that away somehow. read the thread and feel free to ask questions, there are others who have gone through this before and they can help. I wish I could help more but I am in a similar boat.
  3. MarcSmith

    MarcSmith LawnSite Fanatic
    Messages: 7,157

    The reason for the Audit...WC premiums are based mostly on premiums. and as owners generaly are not covered under the policy for solo ops, it seems fairly pointless, unless youwant to bid on commercial props.

    I always paid myself a "stipend" like 1000 a month to cover the WC so that way if i was audited I had a paper trail of payroll.

    Icould never understan the audit, you are paying for the WC, but youare not covered...so...the insurance company is making money for doing nothing. You'd think they'd be happy and not greedy SOBS....
  4. Mjh Excavating

    Mjh Excavating LawnSite Member
    Messages: 123

    They are going to want to see if you hired and paid any subs, they will look at your books for checks made out to cash or large cash withdrawals(under the table money) if you had any subs make sure you have a WC certificate from them or you will be paying it. Have your ducks in a row and there won't be any problems.
  5. mslawn

    mslawn LawnSite Senior Member
    from LA
    Messages: 483

    That does not fly. There are minumum payroll obligations for the owner,I think this year it was 30something thousand, no matter what you paid yourself. He will need an owner exclusion endorsement to not owe anything else.
  6. mattfromNY

    mattfromNY LawnSite Bronze Member
    Male, from Central NY
    Messages: 1,582

    I just had an audit... no big deal. At least in NY, if you recently got the comp. and this is your first audit, it will be no big deal. The guy came to my house (home office), made sure I had my 'notice of compliance' employee poster hanging where an employee could see it (It comes with the paperwork they sent you when you got your policy), made sure I got all the paperwork they had sent me, went over my billing schedule and where to send payments, etc., and basically just described the whole process (why I pay what I do, what to do if we have a claim, where to send payments, how to get a refund if we dont use the whole amount we've paid in, etc.)
    It is basically just a meet and greet with your contact person, it took about 1/2 hour.
    Your monthly payment is based on a salary you dont have, it is just a flat minimum $26000 per year in NY state. It is this way the first year, b/c they dont have any other payroll to go off of, then the next year it will be based on the prior years' payroll, etc.,
    I screwed up when I applied for comp., and told my agent I would be hiring a part-time worker this summer, with payroll approx. 5000.00 this year. Workers Comp. upped my price, even though I havent hired anyone, still dont have payroll, or anything. You will always be billed ahead of time, they base it on what you anticipate doing, then supposedly you will get some of it back at tax time if you dont use it all. I'm not holding my breath!!!
  7. mattfromNY

    mattfromNY LawnSite Bronze Member
    Male, from Central NY
    Messages: 1,582

    Oh, yeah. They will Drill into your head that you MUST pay on time, or you will pay dearly in interest, fines, etc.
    I loved it when the comp. guy told me they could fine me if I didn't return a phone call, or reply to a letter within a certain time frame. I was SO PI$$ED, b/c when I called to confirm my audit, the receptionist couldn't give me an exact time the audit guy would be coming to see me. It would be between 8 and 12. I told her if he wasnt here, I was going to fine them!!!! She didn't find any humor in that.
  8. jsf343

    jsf343 LawnSite Bronze Member
    Messages: 1,786

    :laugh: :laugh: :laugh: :laugh: I love that! you would fine them! hahahaha
    I will have to remember that because that really gets under my skin as well. (as if you had nowhere else to be) I learned a lot reading your post, (I am about to be audited also) 1 question though... did they want to see your shop or tools? mowers, anything like that? You would think they would want to see everything like that to make sure you are safe (no claims) Also, what do you mean by your billing? Customer billing?! why in the sam H would they want to see that? surely thats not what it is. I am curious to hear more.
  9. MarcSmith

    MarcSmith LawnSite Fanatic
    Messages: 7,157

    It was fine when I was solo, but once I got employee's I did Paychex, and they rolled taxes, and WC into the fold for me. no fuss no muss...
  10. supercuts

    supercuts LawnSite Silver Member
    Messages: 2,808

    i was audited last year a few months after i canceled my policy. they sent me different forms and i didnt really read them since i had canceled my policy. after months of getting them i stopped throwing them away and read them. my rates went up $500 since i didnt respond and it was a PITA to straighten it.

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